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"As long as both metroPCS and Leap are both independent, potential acquirers can be expected to play them off against one another ... we remain skeptical that this combination can proceed. With its substantial debt load and cash needs, Leap is easier for a larger player to digest. We also wonder whether the substantial dilution that a stock for stock deal
would impose on metroPCS would make sense for their shareholders.
Looking further down the road, the combined firm would also be large
enough that it could be substantially more difficult for Verizon or AT&T to
get regulatory approval to acquire it, reducing the potential bidding pool by
50%. Assuming that hurdle could be cleared, the merged firm would
benefit from bidders playing off Leap and metroPCS against each other."
from Near Earth, last paragraph of post 169
IMO PCS is not going to buy LEAP, but some other wireless telco may. The point is, if LEAP is bought, PCS' "position of strength" increases.
To me, a lot depends if Lundquist wants to sell PCS or go it alone over the long term. If he is positioning PCS to be sold, the LEAP deal does not make sense, higher regulatory hurtles of the combined companies to another potential buyer sometime in the future. If he is positioning PCS is go it alone for the long term, then maybe buying LEAP makes some sense, but in the short term there would be pain to shareholders. Comments?
PCS @ $5.53 new 52 wk low and all time low: "At the bottom of bear markets the public dumps stocks on the basis of bad news while the pros accumulate. The pros accumulate because they believe the worst has been fully discounted by the market."
PCS' price action has been terrible, to all time low of $5.53. The question is, has the worst been fully discounted by the market in the price of PCS? At this point I have no idea. I knew $8 was a strong resistance point, which we bounded off of on this latest run down. But new 52 week lows and all time low was unexpected. I thought PCS would hold up better than it has after the 130% Q3'09 earnings.
Q4'09 & 2009 earnings on 2/25/10 before market opens.
from Near Earth LLC Vol 6, Issue 1, January 2010, in part:
"Next moves in the wireless endgame"
"metroPCS has demonstrated the best growth (30% yr/yr) in the industry
through the Great Recession – an impressive feat. It also has a financial
engine that makes a decent if unspectacular profit from lower revenue
subscribers despite withering churn (the highest of all the firms we
examined). How do they do it? In two words, cost leadership. From the
point of view of an acquirer, metroPCS brings substantial spectrum
holdings and low cost infrastructure to the table, along with a differentiated
and growing brand recognized for value pricing. With positive free cash
flow, metroPCS’s management can negotiate with suitors from a position
of strength, and as they transition to LTE they are likely to appeal to a
wider audience of buyers. With two substantial uncontracted brands of its
own, and operational issues to boot, we do not see Sprint as a likely
bidder for the time being. As such, we think the most likely scenario is an
acquisition by Verizon in the short term, or AT&T, Verizon or T-Mobile
later on when they are up and running with LTE.
Leap Wireless markets its Cricket brand of uncontracted wireless service
and at first blush looks much like a somewhat smaller version of
metroPCS. However, Leap has slightly lower growth (21%) and ARPU and
is significantly less profitable, due principally to scale effects. As a
consequence, when capex is factored in, the company continues to
expend its cash reserves, though their June 2009 secondary did buttress
them by $264 million. With over $600 million in cash and positive
operating cash flow, Leap appears to have adequate resources for its
budgeted capital program, and has indicated that it will adjust its capital
plans to live within the resources that are available. As it is somewhat
more levered than metroPCS, LEAP’s ability to issue additional debt is
relatively constrained.
From the perspective of a buyer, Leap is somewhat cheaper on a pre-
subscriber basis than metroPCS. In terms of the bidding dynamic, Leap’s
more levered balance sheet is actually an advantage. This is because
most of its enterprise value is tied up in debt, and as such (thanks to the
miracle of leverage) a small premium in enterprise value translates into a
large premium for stockholders – the people who get to vote on the deal.
In contrast, generating a similar premium for metroPCS’s shareholders
requires a buyer to bid at a higher premium on an enterprise value basis.
Given this overall backdrop, we believe that Leap is somewhat more
motivated to do a transaction sooner, and if recent press accounts that
Leap may be shopping for bankers to explore “strategic alternatives” are
true this could be the reason. From a technology and spectrum
perspective, Leap looks a lot like metroPCS, and we would expect the
potential suitors to be identical. As long as both metroPCS and Leap are
both independent, potential acquirers can be expected to play them off
against one another – a tactic that is likely to work better against Leap (the
more “motivated” target) than metroPCS.
While we have considered metroPCS and Leap as potential targets, we
would be remiss to not mention that the two firms previously tried to merge
(metroPCS offered to acquire Leap in a stock for stock deal in 2007) and a
reprise of that scenario is a possibility. While the geographic coverage of
the two company’s networks is complementary, and the combined firm
would enjoy substantial scale advantages compared to the separate firms,
With positive free cash flow, metroPCS’s management can negotiate with suitors from a position of strength.
As long as both metroPCS and Leap are both independent, potential acquirers can be expected to play them off against one another ... we remain skeptical that this combination can proceed. With its substantial debt load and cash needs, Leap is easier for a larger player to digest. We also wonder whether the substantial dilution that a stock for stock deal
would impose on metroPCS would make sense for their shareholders.
Looking further down the road, the combined firm would also be large
enough that it could be substantially more difficult for Verizon or AT&T to
get regulatory approval to acquire it, reducing the potential bidding pool by
50%. Assuming that hurdle could be cleared, the merged firm would
benefit from bidders playing off Leap and metroPCS against each other."
Over 2 million shares traded last hour on small pop to $5.69. Shorts covering? Classic double bottom. Up from here.
vol low; MACD histograms slowly inching up; not much more downside here, IMO. Now analyst's have an $8 TP for PCS! Moorman at S&P still has a $10 TP.
PCS book value $6.31 a share. (source: Yahoo)
Hitting 52 wk low possible, much lower I doubt. I was reading Moorman's S&P Stock Report on PCS dated 1/13/10, "TP $10, PCS shares will be volatile."
The thing that struck me was the other analyst's estimates for Q4'09 and 2010. The low est. for Q4'09 is -$0.03!! and for 2010 $0.06! As I said, IMO "someone" is messing with PCS. Either these guys know something we don't or there is some serious horseplay going on here.
Moorman has est. for Q4'09 at $0.14 and $0.53 for the year and for 2010 $0.60. One year ago Moorman had $18 TP, then $14, then $12 and now $10. Not good.
Other analysts est. averages have $0.46 for 2009 and $0.44! for 2010, -4%.
Can't argue with the bounce off of $8 though, came hard and fast. Next time we hit $8, I might look at it as an exit point. I just am not crazy about PCS' price action. I knew $8 was going to be a strong resistance point, but bouncing back down to near the 52 wk low surprised me after Q3 blow out earnings.
I went to a Best Buy on Saturday. All the wireless telco's had big signs etc., PCS had no sign and a small area off the to side. There is a MetroPCS store almost next door, and I walked in to look around and ask questions. Store looked good, with clear large map of coverage areas in Bay Area, California and nation wide. I asked how business was and the PCS agent said OK. JMHO
SNCR's ConvergenceNow Selected by Dell (DELL) for Device Portfolio (GOOG). 01/19/2010- StreetInsider (from Yahoo mb)
Synchronoss Technologies, Inc. (NASDAQ: SNCR) today announced that its ConvergenceNow Plus platform has been selected by Dell Inc. (NASDAQ: DELL) to globally enable on-demand activations of Dell's entire connected device portfolio, including Dell's first smart phone, designed on Google's (NASDAQ: GOOG) Android Operating System (OS). The ConvergenceNow Plus+ platform will enable Dell to offer its customers across the globe a unique experience via the online channel including streamlining subscriber management functions, as well as, cross channel global service activation with multiple service providers. The initial markets supported will be North America and Europe, and then expanding on a global basis throughout 2010.
"We chose Synchronoss' ConvergenceNow(R) Plus+ platform because it allows Dell the flexibility to activate our entire portfolio of connected devices seamlessly," said Ezra Vance, Director Communications Services at Dell. "Dell takes the customer experience seriously and we are pleased to partner with Synchronoss, who will enable a new integrated solution to enhance the world class buying and mobility experience Dell customers deserve. Around the globe, consumers are demanding connectivity to, from, and between devices. With the help of Synchronoss, we will begin to deliver a variety of options to help consumers activate and manage their 'connected life' with ease."
ConvergenceNow(R) Plus+ is a high performance, multi-tenant platform that enables global OEM's such as Dell, to consume on-demand order processing and subscriber management services. The platform exposes a simple set of adapters that enable customers to activate wireless services independent of the network they are operating.
"The market opportunity for connected devices such as Dell's Smartphone is rapidly expanding and is forecasted to reach upwards of 2.5 billion devices by 2014," said Stephen G. Waldis, President and CEO, Synchronoss Technologies. Waldis added, "We intend to have a global footprint for ConvergenceNow(R) Plus+ and are glad to have Dell as an anchor client."
"We're entering a new era where every device that can be connected will be connected to the Internet and other devices. As we enter the new hyper-connected world, we've begun to realize that connecting these devices is an incredibly complex process," states James Brehm, Senior Consultant, Mobility and the Unwired Experience, Frost & Sullivan. "The only way to facilitate the hyper-growth of smart phones, eReaders, Netbooks, connected Personal Navigation Devices, printers, and cameras are to hide the complexity from the consumer and make the process as seamless and simple as possible. The partnership between Synchronoss and Dell provides consumers with a painless way to enjoy complex technology. When you combine Dell's size, scale, and ability to execute with Synchronoss' global activation system, you end up with a real winning combination."
Much appreciated TD.
TD good to hear from you and Happy New Year 2010. I will check it out. Thanks. Bow
$7.72 and $8 are huge resistance levels. Does not surprise me PCS bounced off $8. IMO "some people" are f**king with PCS. S&P lowing TP to $10 from $12 hurts. Now we need to hold $6, if not it could get ugly.
PCS ended 2009 with just over 6.6 million subscribers, up from 5.4 million at the end of 2008. (source MetroPCS)
In 2009 PCS added 1,200,000 customers, about +22%, think about that, an average of 100,000 new customers a month. Yes there is the about 5.2% churn rate. Still, that is an average subscriber growth gain of about 16% in 2009.
Remember the $6.35 on 1/11/10.
1/12/2010 S&P lowers TP to $10, from $12 and maintains buy: PCS reported Q4 subscriber net additions of 317k vs. our estimate of 255k, while churn of 5.3% was inline with our estimate.
The company also announced a new pricing structure that focuses on
all-inclusive plans and includes taxes and fees in the plan price. We are reducing
our '09 earnings per share estimate by $0.01 to $0.53 and '10 by $0.22 to $0.60. The
reduction is due to lower ARPU estimates, but we still expect solid EBITDA
growth going forward. We are reducing our 12-month target by $2 to $10, based
on enterprise value/EBITDA peer analysis. /J.Moorman-CFA, from S&P PCS Stock report.
Last year Moorman had an $18 TP for PCS, down about 40% since then. Went from $18, to $14, to $12 and now to $10.
1/12/2010: MetroPCS announced it was revamping its calling plans with taxes and fees included in the new prices. The new plans start at $40 for unlimited calling, texting and Web access. Since the new plans offer more features and have taxes included, their prices are about 10 percent lower.
PCS expects margins in its established "core markets" to decline to from 40% to about mid 30%.
MetroPCS said it added 317,000 subscribers in Q4-2009, nearly 39% fewer than its net addition of 520,000 but better than the 66,000 it added in Q3-2009.
PCS ended 2009 with just over 6.6 million subscribers, up from 5.4 million at the end of 2008.
1. Today, 28 million plus shares traded, PCS down about 12%, could be that "someone" believes PCS is a crucial stage in it's development. I have a hard time arguing with such a large increase in trading volume on a large down day, at least right now for today;
2. Key to PCS's growth, is the new market launches in 2008-09 in L.V., Philly, Boston and N.Y. Q4-2009 earnings in February are going to begin to tell the tale if PCS is gaining traction in these new markets. Q1-2010 earnings in May 2010 will also be huge. And in this sense, by late May 2010, PCS will be near it's close today at $6.35 or over $10 a share based on how this plays out.
3. PCS also needs a resurgence in it's core markets, reduce churn rate and hold, or better, average revenue per user (ARPU). This, at least in part, is behind the new pricing plan. Linquist knows what he is doing and has been ahead of the curve in most instances.
4. I really do not fully understand the ramifications of PCS moving forward to G4 LTE in 2010 and beyond. But from what I have read, this could actually be the key to PCS moving forward to reduce it's costs while providing a marketable product and holding on to ARPU. But this looks like 2011, at best. JMHO
PCS @ $6.35. Broke through $7.35, $7.12, 7.00, 6.62 and 6.40 support levels on heavy volume today.
Next support is 6.21 and $5.97. Interesting to see if PCS can hold $6, is so, we start the path back up to the huge $7.72 and $8 resistance levels (which are what PCS just bounced off of), with only $7.53 to be added to the support levels broken today on the way down to the $6.35.
Lets see where PCS closes at the end of the week and the end of January, which, IMO, will tell the tale on the new pricing structure and "margin squeeze," remember $6.35. Then in February, Q4-2009 earnings, which will shed some light on this roller-coaster ride. Crikey, still, a bad day at Blackrock.
PCS at about $7.45, broke through two support levels today: $7.35 is next support then $7.12, 7.00, 6.62, 6.40 and 6.21.
Resistance: $7.53, $7.72, $8.00, 8.38, 8.51, 9.56, 9.90.
$7.72 and $8 are huge resistance levels for PCS. Once >$8 for good, $10-12. JMHO
Almost ... MACD histograms trending down, must keep an eye on to see if goes <0. If so, PCS running out of steam for the time in being.
Key for "long term" is > $8 and staying over it. Crucial Q4-09 earnings in February. If good to great, maybe $10-12 in 2010.
Yes. Important b/c closed >$7.72 which was the support PCS bounced off on it's way to >$10. Right now $7.72 is a huge support level, if it can hold it. Next >$8 and holding it.
PCS @ $7.55, support and resistance levels. Google charts are the show them the best. By the way, the $7.53 was the old 52 week low, before < $6.
10.14
9.90
9.36
8.51
8.38
8.01
7.72
resistance:
@ $7.55
support:
7.36
7.12
7.00
6.62
6.40
6.21
December 15, 2009 PCS 7.43 BERNSTEIN INITIATES METROPCS (PCS), LEAP WIRELESS (LEAP) WITH OUTPERFORM... Analyst Jim Mathias says competition within pre-paid wireless
market is intense, and is only getting worse. Notes with a surfeit of competitors,
the market is structurally unstable. Says with this as a backdrop, expectations for
LEAP, PCS are, not surprisingly, low; but in his view, they are now too low. Says
as the lowest cost providers in the pre-paid market, LEAP, PCS are positioned to
withstand further price compression; their competitors are not. Has $23 target to
LEAP, $10 for PCS./B.Brodie from S&P PCS Stock Report, TP $12.
Deutsche Bank's 12/17/09 coverage of sell of PCS is interesting. As of Q3-09 D.B. held 3.6M shares of PCS, +2.8M shares, +390% in Q3, valuing $27M. Obviously we do not know what they did to date in Q4. Any comments on this?
I have PCS's institutional holdings on NASDAQ in a button in the IBox.
Managed to endure Cramer till his PCS spot. He has a $9 TP and was rather impressive re: PCS, then I turned him off. Man, what an irritating person ;-(
Moorman at S&P has $12 TP for PCS. But about a year ago he had an $18 TP. IF PCS can execute it's new market expansion plan effectively and integrate the new G4 LTE network next year and beyond, the later target is within reach. IMO, keys to PCS:
1. PCS's churn rate- are there service problems causing the churn? If so, is PCS working to fix this problem, e.g. the continuous service expansions? Is G4 LTE going to solve some of these "problems," if they are problems. If PCS's networks are "spotty," maybe people will pay $20-30 more a month for all you can eat on a network that provides better overall coverage (T-Mobile's base all you eat voice only is $50, plus taxes and fees= $60; PCS $35, including taxes + fees). A lot of the analyst "downgrades" are siting increasing competition in pre-paid.
2. Traction in PCS's new markets. Q4-09 results, coming out in early 2010 should tell the tale.
Traction in new markets, holding on to core markets (churn), G4 LTE launch in 2010 and some luck, could high double digits is possible 2010+? First of course we first have get over $8, and stay over it (PCS should have been <$8), $10, $12+.
Now I've seen it all: Cramer- buy PCS http://www.cnbc.com/id/34481793
Even though I can't stand Cramer, he can still move stocks. AH today 400K+ shares, @ about $7.80.
We had gained 10% this week, we are just bouncing off the $7.72 resistance. IMO this is normal. Breaking through $7.72 is going to take some time. After we punch through this and > $8, and stay there, on to $10-12. IMO analysts are low balling PCS earnings, except Moorman at S&P, and he has $0.54 for 2009 and $0.82 for 2010. Compare these with the estimates on Yahoo. IF PCS is gaining traction in new markets like N.E., Moorman's estimates could be on the low side.
Support is at $7.53, 7.36, 7.12 and 7.00.
Resistance is $8, 8.38, 8.51 and 9.36.
look at the one year chart and on 9/1 we have $7.72 support as PCS trended back up to $10 before the fall to < $6. Now this $7.72 is a huge resistance level and if PCS can break through this, and hold above it, PCS could break through $8+. It will be interesting to see if PCS has the buying power to do this quickly or if it is going be a long drawn out process with some selling pressure after the recent run-up. Closing > $8, and holding it, is the key with the $7.72 as the inflection point.
After $7.36, not much resistance to $8.00.
Closed at $7.35 resistance; next $8.00, 8.38, 8.51, 9.56, 9.90. >$8, and holding it, would indicate PCS is bullish, as P&F chart 50% retracement from $6 and $10; with TP's $10-$12.
Support: $7.12, 7.00, 6.62, 6.40 and 6.21.
P&F charts filter out much of the "noise" in other types of charts. IMO they have huge value in "identifying the big picture."
Based upon PCS's P&F chart, we have a low pole to $6, from $10. Technically, a move over the 1/2 point of the low pole would be signal a reversal and could indicate a bullish move. 10-6=4, 4/2= 2.
So in PCS's case, a close >$8, staying over $8 could be bullish. Also this is over the old 52 week low of $7.53.
PCS @ $7, closed > 50MA ($6.97). Closed gap from Nov 5 (blow-out earnings and PCS hits new 52 wk low :-/). Next resistance around high $7's- $8, then $8.50.
Barron's 12/7/09 articles on Sprint and AMX. S article has good discussion on prepaid market and G4 roll-out in 2010.
$6.61 close today. Resistance: $7.12 then the huge $7.53, the old 52 week low;
$8.05
$8.25
$8.50
$8.88
$9.05
$9.59
$9.90
$10.65;
Support $6.40, $6.21 and $5.97.
Still have a long way to go to double digits.
Q2-2009 low was $13.31, high $18.75;
Q3 low was $7.72, high $13.72.
If/and when we can clear the $7.53 and stay over it, PCS is back on the bull. But the longer this takes the less strong the bull signal.
Comments on PCS and G4 LTE from bricktop: "But PCS made the very wise decision of skipping an entire 3G network upgrade & sticking to 1xRTT & 1xEV-DO which is already 2.5G-3G speeds which saved them $500M in CAPEX. Leap on the other hand spent millions upgrading to 3G technology - while 3G is on it's last leg in the technological life cycle.
I really think that Metro is gunning to be the first U.S. carrier to offer 4G - even for just the bragging rights and the notoriety."
http://www.cellular-news.com/story/40756.php The most important part of this piece, if true, is that Q4 LTE wireless technology will make the difference in CDMA and GSM technologies mute:
"In September, T-Mobile was reported to be in talks with MetroPCS. Although MetroPCS is a CDMA operator, it has committed to a LTE launch next year, which offers an upgrade path for T-Mobile USA."
This is huge, just ask Sprint, which was/is CDMA, after choking on Nextel's iDEN technology after buying Nextel.
Thus T-Mobile's GSM and PCS's CDMA technology differences should not be a problem, morphing into G4 LTE in 2010 and beyond. Of course this does not mean T-Mobile is going to buy PCS, but at least the different wireless technologies may not be a problem moving forward if T-Mobile, or someone else, does buy PCS. PCS has announced that it will be moving into Q4 LTE wireless technology in the latter part of 2010.
PCS holding changes for Q3-2009 from nasdaq.com. As you can see there were +10M shares new positions and 15M increase in holdings. Not a lot but more buyers than sellers. The first number is the number of institutions with activity. Q3 low was about $7.72:
Ownership Analysis # Of Holders Shares
Total Shares Held: 326 224,474,116
New Positions: 60 21,660,186
Increased Positions: 159 54,260,391
Decreased Positions: 141 39,372,833
Holders With Activity: 300 93,633,224
Sold Out Positions: 54 10,674,821
Currently DT uses GSM technology and PCS uses CDMA. These two different technologies are not compatible and the phones on one network will not work on the others network.
The evolution to the next generation G4- LTE in 2010 and beyond might solve some of these problems, but I need more information on this. I know they talk about CDMA G4-LTE, but whether this would be compatible on a GSM G4-LTE, or if it makes any difference at all in G4 technology, I do not know. Any comments on this?
This is a huge issue, just ask Sprint, which ended up coughing up it's merger with Nextel, in part because the two companies were using different telephony technologies, S CDMA and Nextel's iDen.
As of end of Q3-09, Credit Suisse held 105,000 shares of PCS, $644,000. In Q3 they sold 11,800 shares or 10%. On 10/23/09 CS analyst issued an underperform rating and $4 TP. Q3 low was about $7.72.
We will not know if CS sold out of PCS in Q4 until about mid February, 2010, when the institutional holdings for Q4 are published on nasdaq.com.
Also Soros Funds took a position in PCS in Q3.
ALK Q3-2009 Institutional holdings:
http://www.nasdaq.com/asp/holdings.asp?symbol=ALK&selected=ALK&FormType=Institutional